Page:United States Statutes at Large Volume 102 Part 4.djvu/429

 PUBLIC LAW 100-647—NOV. 10, 1988 "(ii) CLARIFICATION WITH SUBPARAGRAPH

102 STAT. 3399 (B).—In

applying clause (i), there shall not be taken into account any indebtedness for interest described in subparagraph (B)." (19) Subparagraph (E) of section 382(1)(5) of the 1986 Code is amended by striking out so much of such subparagraph as precedes clause (i) thereof and inserting in lieu thereof the following: "(E) ONLY CERTAIN STOCK TAKEN INTO ACCOUNT.—For purposes of subparagraph (A)(ii), stock transferred to a creditor shall be taken into account only to the extent such stock is transferred in satisfaction of indebtedness and only if such indebtedness—". (20) Paragraph (4) of section 382(h) of the 1986 Code is amended— (A) by inserting before the comma at the end of subparagraph (A) the following: "(or to the extent the amount so disallowed is attributable to capital losses, under rules similar to the rules for the carrying forward of net capital losses)", and (B) by striking out "TREATED AS A NET OPERATING LOSS" in the paragraph heading and inserting in lieu thereof "ALLOWED AS A CARRYFORWARD".

(21) Paragraph (1) of section 382(g) of the 1986 Code is amended— (A) by striking out "new loss corporation" and inserting in lieu thereof "loss corporation", and (B) by striking out "old loss corporation" and inserting in lieu thereof "loss corporation". (22) Paragraph (6) of section 382(h) of the 1986 Code is amended to read as follows: "(6) TREATMENT OF CERTAIN BUILT-IN ITEMS.— "(A) INCOME ITEMS.—Any item of income

which is properly taken into account during the recognition period but which is attributable to periods before the change date shall be treated as a recognized built-in gain for the taxable year in which it is properly taken into account. "(B) DEDUCTION ITEMS.—Any amount which is allowable as a deduction during the recognition period but which is attributable to pericSs before the change date shall be treated as a recognized built-in loss for the taxable year for which it is allowable as a deduction. "(C) ADJUSTMENTS.—The amount of the net unrealized built-in gain or loss shall be properly adjusted for amounts treated as recognized built-in gains or losses under this paragraph." (23) Paragraph (9) of section 382(h) of the 1986 Code is amended by striking out "is transferred" and inserting in lieu thereof "was acquired (or is subsequently transferred)". (24) Subsection (m) of section 382 of the 1986 Code (as amended by paragraph (1)) is amended by striking out "and" at the end of paragraph (3), by striking out the period at the end of paragraph (4) and inserting in lieu thereof ", and", and by adding at the end thereof the following: "(5) providing, in the case of any group of corporations described in section 1563(a) (determined by substituting '50 percent' for '80 percent' each place it appears and determined

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